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From Cyclical Metal to Strategic Constraint
 

BOTTOM LINE

Copper demand has leaned on construction, autos and China’s infrastructure waves – sectors with meaningful GDP elasticity and cyclical exposure.¹ Today, the centre of gravity is rotating toward AI/data-centre campuses, power grids, defence rearmament, EVs and fast-charging – programmes mapped years ahead by utilities, hyperscalers and governments, and therefore less sensitive to short-term cycles.²

On the supply side, near-term refined balances look comfortable (despite some signs of tightness along the refinery chain), with forecasts of a surplus in 2025, but the forward-looking supply pipeline may  give way to structural tightness as new mined output lags strong projections in demand.³ Announced mines meet only ~70% of primary supply needs by 2035, implying persistent tightness unless more projects, brownfield debottlenecks and recycling scale materialise.⁴ Meanwhile, diversified miners are pivoting towards copper via M&A and capital markets, potentially signalling a strategic bid for high-quality copper optionality.^5,6,7

As this tightening supply outlook meets surging physical demand, copper is emerging as not just a beneficiary of the AI buildout, but as a potential constraint – the critical material that could govern its speed and scale.

1) Data Centres & Digital Infrastructure

Why demand growth is “real economy” and sticky

• AI build-outs are multi-year commitments:
  • The IEA expects data-centre electricity demand to more than double by 2030, largely due to AI—potentially locking in long-dated electrical packages rich in copper.⁸
• Hyperscaler capex has shifted from R&D to concrete and cables:
  • Dell’Oro projects global data-centre capex compounding ~21% annually to 2029, with hyperscalers accounting for ~50% of a ~$1.2T total—sustained ordering for power gear, busbars and switchrooms.⁹
• Campus scale is rising, not just count:
  • Synergy counts 1,136 hyperscale sites by end-2024 and notes increasing average size/density—each increment scaling electrical copper needs.¹⁰

Persistence of Demand

DC campuses are planned, permitted and power-contracted on multi-year arcs; grid equipment and cable lead times have lengthened, reducing cyclicality.¹¹

2) Defence Rearmament

Structurally Higher Spending, with an Emphasis on Procurement over R&D

• Budgets are stepping up for a decade-plus:
  • NATO adopted a 5%-of-GDP defence and security investment goal by 2035 (3.5% core defence + 1.5% related), structurally lifting procurement capacity.¹²
• Near-term floor is already higher:
  • By 2025 all 32 NATO members met the longstanding 2% target, increasing sustained demand for platforms and munitions with high copper content.¹³
• Europe is rebuilding stockpiles and industry:
  • The EU’s ASAP mobilises finance and permitting to expand ammunition/missile capacity—multi-year factory and tooling cycles with heavy electrical content.¹⁴

Persistence of Demand

Rearmament is policy-driven and multi-year; once appropriated and contracted, spend tends to execute through cycles.¹⁵

3) Power Grids, Transformers & HV Equipment

Investment in Grids is Stepping up and Copper Intensive

• Grid investment has seen a resurgence after decades of flat investment:
  • Grid investment across Americas, EMEA and APAC saw no investment within ‘transition’ budgets until 2020, since which there’s been a 46% increase.¹⁶
• Lead times and prices reset higher:
  • Since 2019, cable prices nearly doubled; transformer prices rose ~75%; delivery times for HVDC cables and large transformers stretch years—smoothing order books.¹⁷
• Materials price sensitivity is real policy risk:
  • Copper and aluminium are ~20% of grid investment costs, so planners pre-commit to secure packages and timelines—another anchor for demand.¹⁸
• Investment momentum is broad-based:
  • Global grid capex set new records and continues to rise as governments prioritise reliability and decarbonisation, sustaining copper pull even through macro noise.¹⁹

Persistence of Demand

Regulated utilities build to mandated reliability and connection targets; once procurement starts, packages typically run to completion.²⁰

4) EVs and Fast-Charging

Transition to EVs and Fast-Charging Uses Incrementally More Copper

• Vehicle copper intensity steps up structurally:
  • A battery-electric car uses roughly three to four times as much copper as an ICE—compounding fleet-wide demand as EV share grows.²¹
• Charging is copper-hungry on the power side:
  • A DC fast-charger can require about an order of magnitude more copper than a typical Level-2 AC charger—small units add up fast, but it’s fast-charging that really loads the grid.²²
• Policy programmes keep the pipeline moving:
  • In the U.S., revised NEVI guidance (Aug-2025) restarts and streamlines deployments—fueling multi-year sitework and electrical buys despite near-term swings in EV sales.²³

Persistence of Demand

National network targets and OEM model pipelines shape a steady cadence of chargers and copper-heavy power upgrades.²⁴

5) Buildings & Industrial Electrification

Industrial Electrification Continues, and Requires More Power

• Efficiency standards are tightening:
  • Only about three in five industrial motors are covered by minimum standards today—policy catch-up drives replacement/retrofit cycles that are copper-intensive.²⁵
• Heat-pump adoption wobbled, but policies persist:
  • After a 2023–24 dip in Europe, signals point to a policy-supported rebound and continued U.S. growth—keeping the medium-term electrification trend intact.²⁶
• Electrification is a productivity play, not just climate:
  • Upgrades improve reliability and operating costs, so projects tend to proceed once financed—tempering macro cyclicality.²⁷

Persistence of Demand

Regulatory ratchets and corporate energy-cost logic underpin steady retrofit cycles rather than stop-start spending.²⁸

What this Means for Miners

• Demand is likely less cyclical than it used to be. With utilities, hyperscalers, EV infrastructure and defence driving a larger share of copper use, miners can plan production and marketing against more “scheduled” demand rather than volatile construction and discretionary goods.²⁹
• Long lead times favour incumbents and brownfield projects. Average mine lead times have stretched toward ~18 years globally; expansions and debottlenecks at existing complexes are advantaged as markets tighten.³⁰
• Structural tightness argues for discipline, not volume at any cost. On today’s pipeline, announced mines meet only ~70% of 2035 needs; capital is best deployed where geology, power and water are de-risked, with offtake optionality into data-centre grids, EVs and defence.³¹
• Consolidation signals strategy, not exuberance. Recent deals point to “buy quality copper optionality” rather than invest in production – healthy capital discipline for the cycle ahead.³²